Maryland Gov. Harry Hughes, convinced that local governments should share the burden of the state's fiscal crisis, is considering deep cuts in the state grants that helped Prince George's County lower its property tax rate this year without reducing services, and that add about $9 million a year to Montgomery County's coffers.
The proposal to cut the $38 million in grants to local governments, which Hughes first floated during a breakfast with legislative leaders two weeks ago, has stirred fierce opposition among most county officials -- particularly in Montgomery County, whose leaders say their government would suffer most of all.
"We're in the middle of budget preparation and we were not anticipating having $9 million ripped away from us," said one Montgomery County aide. And the lobbyist for the Maryland Association of Counties said of the idea: a"We know about it and we don't think a helluva lot of it."
The proposal is still "in the discussion stage," according to several officials, so it is unclear how deeply Hughes will try to cut the grants, if at all. Nonetheless, several key senators and delegates say they would grudgingly support such cuts as the lesser of evils in a tight fiscal year, and local politicians are already jockeying for position under the assumption that the proposal will surface during the 1981 legislative session.
The grants in question go to Maryland's 23 counties and the city of Baltimore, based on their separate property tax bases, with no strings attached. These grants are considered the easiest target politically for budget cuts since other state grants are tied to education, transportation, social services and other programs, each of which has an organized constituency.
"I think it might be easier to bear than some of the other cuts, particularly in areas like day care, services for the elderly and some of the critical human services areas," said Senate Majority Leader Rosalie Abrams (D-Baltimore).
Montgomery County, which has the state's largest property tax base, would suffer most if the grants are eliminated or cut back, while the city of Baltimore, with its diminished tax base, would suffer much less. Prince George's County would also feel the squeeze since state aid was largely responsible for this year's 35.5-cent property tax cut, from which county executive Lawrence J. Hogan reaped political capital.
If the grants are eliminated, Montgomery will lose $9 million in the next fiscal year, and Prince George's will lose $5.89 million, according to preliminary estimates by the state Department of Fiscal Services. By contrast, Baltimore City would lose $3.9 million, and rural counties would suffer the least of all.
Hughes and legislative supporters of the measure are selling it by noting that Maryland's local governments shared in the bounty during the years of large state surpluses, and should, in return, help the state through the lean years. In addition, state government lost an estimated $34 million in federal revenue sharing money this year while local governments held the line, state officials pointed out.
Because of the fiscal squeeze, Hughes is not expected to include a state employes' pay raise in the budget he will submit to the General Assembly on Jan. 21. Officials close to Hughes say he would like to use the $38 million in grants to the subdivisions to finance a pay raise. But he will have to propose legislation to do so, since the grant formula is now fixed by state law.
"This is the year to set the tone," said Del. R. Clayton Mitchell (D-Kent), chairman of the House Appropriations subcommittee on health and natural resources, who said he would support a cut in the subdivision grants. "If we're going to cut back in state government, we've got to pass the message along to counties."
House Appropriations Committee Chairman John R. Hargreaves (D-Caroline), while saying it is too early to take a stand on this issue, observed: "There is a feeling among the legislators that the state can't just keep giving these grants to subdivisions when we've got problems of our own in financing state government."
House Speaker Benjamin L. Cardin (D-Baltimore), who is believed by the measure's opponents to be one of its potential supporters, said he doubts it could pass unless local governments get something from the state in return.
Local officials argue against the cutback by warning that it would force them to raise property taxes, passing the burden of the fiscal crisis to the taxpayers. "This is contrary to what we're trying to do this year because what it amounts to is a property tax increase," said Del. Donald B. Robertson (D-Montgomery), the House majority leader.
Montgomery County officials, well aware of Hughes' disposition toward cutting state aid to subdivisions, are already at work on counterproposals to reduce aid in ways that would not dig so deeply into Montgomery's revenues. t
For example, they have proposed that the state spread the cuts among all programs that it finances in the jurisdictions, rather than cutting only the grants that are calculated according to property tax bases. This approach would hurt Baltimore City the most, since Baltimore received about one-fourth of the $1.15 billion that the state spent last year on education, transportation, health and other programs and grants for local governments. By contrast, Montgomery County got about 11 percent of the total state expenditures, they point out.
"Property tax is an easy way to make the cuts, but a fairer formula would be to determine overall how much aid goes to each subdivision and cut on that basis," said Sen. Laurence Levitan (D-Montgomery), chairman of the Senate Budget and Taxation Committee.